Top investor questions

Ocado Group operates the following reporting segments:

• Ocado Technology Solutions – a global technology solutions provider with two commercial arms operating in online grocery and non-grocery sectors.
• Ocado Logistics – a high-performing logistics and fulfilment business in the UK operating the Ocado Smart Platform solution for Ocado Retail and Morrisons.  
• Ocado Retail – one of the world’s leading pureplay retailers in online grocery. Until April 2025 Ocado Group also consolidated its 50/50 Joint Venture (Ocado Retail) in its accounts. As long-planned, responsibility for reporting Ocado Retail results has now shifted to Marks & Spencer. Ocado Group now equity accounts Ocado Retail.

Ocado Technology Solutions:

• In online grocery – our Ocado Solutions business model generates recurring revenue through the licensing of our hardware and software technology products and services - the Ocado Smart Platform. As the number of Customer Fulfilment Centres (CFCs) and drawn capacity (live modules) grows for our partners, so will our revenue and cash flow.
• In non-grocery, distribution and logistics industries – the Ocado Intelligent Automation (OIA) business model largely utilises Ocado’s existing automation solutions. However, OIA operates a capital-light model, selling our automation in predominantly one-off transactions.

Ocado Logistics:

• Ocado Logistics, our UK-based (“3PL”), provides logistics support for CFC operations, fulfilment and delivery, earning a fee from our UK partners (Ocado Retail Ltd and Morrisons) with the vast proportion of its revenues reflecting the costs it manages on behalf of its two partners.

• A ‘module’ describes a unit of capacity in an Ocado CFC. In essence it reflects a level of volume processed through Ocado’s automated technology.  
• A way to model it would be to assume that 1 module of capacity is typically equivalent to around $100m1 of grocery sales. Partners will order CFCs with a designed level of module capacity, and then draw down modules in line with their growth plans.
• Ocado’s ongoing fees per CFC are related to the number of modules drawn down or “live”.

• Ocado’s grocery retail partners use their country market expertise to secure and typically build a warehouse or CFC shell; leveraging a lower unit cost of real estate versus a retail store
• Ocado funds the installation of its warehouse automation and provides the use of its automation and end-to-end online grocery solution for a recurring fee
• The grocery retailer retains full ownership of its customers and income statement drawing down on sales capacity or “live modules” as its sales grow.

• We believe the Ocado Smart Platform provides benefits to both the customer proposition and the grocery retailers’ economics.
• For customers, the Ocado hive enables a hypermarket assortment (c.50k range), greater freshness, a significantly higher level of perfect orders with our availability-to-promise and shelf life features and on-time dispatch
• From an economic perspective, the Ocado way:  
  • removes cost by eliminating the upstream (RDC) warehouse network, with automation reducing the total CFC labour time to pick 40-plus item basket to c.10 minutes
  • enables superior gross margins via lower aggregated inventory holdings, reduced wastage (from higher stock-turn) and higher-margin long-tail items
  • continually optimises delivery routing, trucking and van management.
• As a consequence, the Ocado solution removes sufficient cost to enable fully costed profitability after accounting for the costs of picking and delivery
• The Ocado automated solution compares favourably to a store-pick model which adds manual picking and delivery costs to an already low margin store operation; constrained by a smaller in-store range and lower levels of stock availability and visibility.

• Ocado targets the following economics for a standard CFC:  
  • an investment of c.12% of retail sales in MHE automation; partly offset by upfront fees typically in the order of 4% retail sales
  • ongoing fees of c.5% retail sales; noting that fees from our first generation CFCs (Hatfield and Dordon in the UK) are lower
  • The majority of our partners have now signed on to fit Ocado’s new generation automation (Ocado Re:Imagined). These technologies, such as On-Grid Robotic Pick - will drive c.50bps of incremental fees; relative to c.100bps of cost efficiencies for our partners
  • Ocado incurs c.1.5% of retail sales as direct operating costs. Relative to a c.5% fee this drives a c.70% contribution gross margin. This results in a net fee of 3.5% of retail sales for the retail partner.  
  • Ocado expects to drive its direct operating costs to below 1.5%, with a clear line of sight to at least 1.25%
  • The Technology Solutions business also incurs technology and support costs beneath its contribution gross margin; these costs will be both subject to efficiency targets and will be leveraged by rising fees.
• The above economics vary by site, noting that costs vary by geography (e.g. in seismically active regions) and size (our largest CFC is c.22 modules and our smallest is c.2 modules.)

• Ocado’s technology and logistics model benefits retailers by taking costs out of multiple P&L lines, as well as generating new revenue opportunities through better use of data.  
• Ocado’s technology enables retailers to be radically more labour productive, reducing one of the largest costs in online grocery fulfilment. It also enables greater supply chain efficiency - significantly reducing waste as a % sales - and supports the most efficient last mile possible.  
• In the mid-term we expect the Ocado model to enable partners to drive higher profitability in online grocery than in stores.

• We are confident that Ocado’s technology is - to a great degree - unique in the marketplace. We currently have over 1,800 pending patent applications and nearly 1,300 granted patents, and (in grocery) we offer end-to-end, integrated proprietary solutions across ecommerce, supply chain, fulfilment, and last mile. In general, other solutions in the market are often targeted at one or a small number of elements in that process.  
• We believe that our CFCs are the most labour efficient warehouses for single pick online grocery in the world.

Explore our analyst consensus page for a summary of recent analysis on Ocado Group.

Ocado is partnered with 13 of the world’s leading grocery retailers, across 11 markets. We have also signed our first agreement in non-grocery, with McKesson Canada. Explore our partners and clients page to find out more about our partnerships and progress with our partners and customers around the world.

Ocado Group is listed on the London Stock Exchange (LSE) under the ticker symbol ‘OCDO’.

You can purchase Ocado Group shares through online trading platforms and licenced stockbrokers.

You can contact our Investor Relations team at investor.relations@ocado.com

You can find our upcoming dates on the financial calendar.

You can find our upcoming dates on the financial calendar.

For the most current information on Ocado’s dividend policy, please review our latest financial statements.